EDITOR: This was sent to all bookstore owners after the holiday
season, with hopes that we could get this information out into our
communities: In what was a challenging holiday season for many
retailers, one group of merchants is surely smiling as 2003 begins.
For online retailers, business has been great.
EDITOR:
This was sent to all bookstore owners after the holiday season, with hopes that we could get this information out into our communities:
In what was a challenging holiday season for many retailers, one group of merchants is surely smiling as 2003 begins. For online retailers, business has been great.
The number of U.S. households with Internet access that have purchased gifts online jumped by 19 percent, and analysts now expect holiday sales to show a sales growth of between 30 to 35 percent, reaching $13.1 billion.
California will be seeing very little upside from this Internet bounty, however. The reason is that a number of national retailers with a physical presence within our state continue to flout the law by not collecting sales tax on the sales made by their e-commerce operations, even as states face the most dire fiscal challenge since World War II.
With the disingenuous contention that they do not have a physical “presence” in our state, these online scofflaws are hiding behind the facade of “separate” Internet companies – even as they work hand-in-glove with their bricks-and-mortar stores, offering customers a seamless shopping experience.
As a result, these national chains refuse to collect sales tax on their online sales, and, in doing so, continue to unfairly penalize our state’s independent businesses’ e-commerce initiatives. More importantly, their refusal to obey state regulations is further contributing to a sea of red ink in growing state deficits.
Make no mistake: This is not a call for new “Internet taxes.” Rather, it’s a challenge to state leaders to equitably enforce current state tax regulations. The “bricks-and-clicks” corporate strategy employed by many national chains clearly establishes a physical presence in California. As a result, they should be held to the same standard as any other retailer.
Governments should never be in the business of playing favorites among retailers, and to do so now will only compound a growing state fiscal crisis. As the National Governors’ Association has noted, despite significantly curtailing state spending, 37 states were forced to reduce their enacted budgets by about $12.8 billion in fiscal 2002. About mid-way through the current fiscal year, 23 states plan to reduce their net enacted budgets by more than $8.3 billion.
Clearly, falling tax collections are handicapping our state’s efforts to serve citizens. Nationally, in fiscal 2002, sales tax collections were 3.2 percent lower than originally budgeted, personal income tax collections missed states’ targets by 12.8 percent and corporate income taxes were a staggering 21.5 percent lower than projected. Forty-one states collected less revenue in fiscal 2002 than they had planned for in their budgets.
When companies dodge their legal responsibility to collect sales taxes, they are siphoning money away from such essential local services as policing, fire fighting, and schools. Over the past few years, the problem has only grown worse, as more e-commerce companies that fail to collect sales tax compete unfairly, driving more consumers online because of an unfair playing field.
The independent booksellers of California and other independent retailers are not asking for special treatment. However, we are looking for our state government to enforce the laws uniformly and fairly.
It’s time for state leaders to take concrete steps to end this discriminatory enforcement of existing law and require all retailers – whether they operate online, in physical stores or in some combination of both — to start to fulfill their obligation to collect sales taxes.
Brad Jones,
BookSmart co-owner,
Morgan Hill
